Did doctors made much more money in the 70's and 80's than they do today?

Ibn Alnafis MD

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Hi,

I came across this article and wanted to share it with you.

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1646197/pdf/amjph00282-0094.pdf

On many occasions, I heard physicians and medical students wine about the continious decline in doctors' income. Although I agree that cuts in reimbursement are very likely to take place in the near future, and that some specialties have experienced significant pay cut for certain procedures, evidence shows that doctor's salaries back in the "golden" days are very comparable to those of the current days.

For example, using the inflation calculator, I calculated that the average physician's income in 1973 ($45000 in 73 $) is approximately $220k in today's money.

I realize that there are other variables that play into the "lifestyle" equation (such as tuition), but my point is that the average doctor in the 70's wasn't John Rockefeller.
 

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Hi,

I came across this article and wanted to share it with you.

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1646197/pdf/amjph00282-0094.pdf

On many occasions, I heard physicians and medical students wine about the continious decline in doctors' income. Although I agree that cuts in reimbursement are very likely to take place in the near future, and that some specialties have experienced significant pay cut for certain procedures, evidence shows that doctor's salaries back in the "golden" days are very comparable to those of the current days.

For example, using the inflation calculator, I calculated that the average physician's income in 1973 ($45000 in 73 $) is approximately $220k in today's money.

I realize that there are other variables that play into the "lifestyle" equation (such as tuition), but my point is that the average doctor in the 70's wasn't John Rockefeller.
Well, I am no expert on this, but I will share what I have heard, and express my take on it. My father had a friend who was a specialist, that in today's money would be pretty high paid, but not extraordinarily high paid. His vacation home in today's prices is around 3-4M on an island in the east, frequented by prominent members of the republican party. A doctor I researched who lives in Manhattan, has lived in the same home during his entire practice, and he also started very late as a doctor. His home today is on the market for about 30M, and a doctor of today would probably in no way be able to live in this neighborhood unless they moonlighted on The Street. Especially this example really explains that there was a different gap between financiers, in the lower upper 1% of America in comparison to fellowship trained doctors. Another doctor my dad knows from back in the day used to be the owner of an island now frequented by businessmen that fly in prop-planes and come in for the weekend to a water-side club with vacation homes. Maybe these aren't the best examples, but I think the Manhattan one is decent, because now its just impossible to live in that scale of a house, and after checking this doctor's background, he did not appear to be well off, and even started med school at a non-traditional timeline. I have personally known a heavy donor to a medical school, and he attended my sister's wedding. This guy started off poor, went to dental school and oral and maxillofacial surgery residency, then bought a home today worth approximately in the upper 1-2% of the city right away. I have not seen any doctor of new blood buy a home this fast, not to mention this big.
 
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Ibn Alnafis MD

Ibn Alnafis MD

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Well, I am no expert on this, but I will share what I have heard, and express my take on it. My father had a friend who was a specialist, that in today's money would be pretty high paid, but not extraordinarily high paid. His vacation home in today's prices is around 3-4M on an island in the east, frequented by prominent members of the republican party. A doctor I researched who lives in Manhattan, has lived in the same home during his entire practice, and he also started very late as a doctor. His home today is on the market for about 30M, and a doctor of today would probably in no way be able to live in this neighborhood unless they moonlighted on The Street. Especially this example really explains that there was a different gap between financiers, in the lower upper 1% of America in comparison to fellowship trained doctors. Another doctor my dad knows from back in the day used to be the owner of an island now frequented by businessmen that fly in prop-planes and come in for the weekend to a water-side club with vacation homes. Maybe these aren't the best examples, but I think the Manhattan one is decent, because now its just impossible to live in that scale of a house, and after checking this doctor's background, he did not appear to be well off, and even started med school at a non-traditional timeline. I have personally known a heavy donor to a medical school, and he attended my sister's wedding. This guy started off poor, went to dental school and oral and maxillofacial surgery residency, then bought a home today worth approximately in the upper 1-2% of the city right away. I have not seen any doctor of new blood buy a home this fast, not to mention this big.
I was comparing only the incomes, not the lifestyle. Besides most of those multi-million dollars houses were significantly cheaper back in the days. Still, I could give you countless of examples of rich "new blood" doctors. Have you ever watched Dr. 90210. In one episode, Robert Ray MD was remodeling his kitchen for one million dollars!
 

DocEspana

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The issue is that from 1997 on physicians pays have been frozen (technically they rose 0.4-0.6%). Measuring against the seventies is a bad way to measure because the golden age of physicians was actually the late 80s and early 90s, when all these ridiculous HMO/PPO/ACO/XYZs were new, weak, and the doctors could game them into huge patient inflow increases at prices dictated (more or less) by physicians.

Since 1997 the pay from medicare has been frozen and everything else is paid out as a percentage of medicare payment schedules. So the bigger issue is the last 15 years have had zero effective growth against inflation. As you pointed out: in 40 years inflation accounted for a 490% increase in worth (or a 80% decrease in the buying power of the dollar, as it may be if you do the stat the other way). Now in 15 years the physician has seen no increase in payments and payments have been totally independent of inflation. Think about how much lost revenue the unresponsiveness to inflation accounts for.

*that* is the issue. The argument here might be did physicians get spoiled with the real golden age of 1985-1995, and perhaps the price freeze is only a travesty through the eyes of someone who had experienced the income golden age.... since the income now (admittedly with a much higher patient load) is finally back to equivalent inflation-adjusted earnings to what it was 40 years ago.
 

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The issue is that from 1997 on physicians pays have been frozen (technically they rose 0.4-0.6%). Measuring against the seventies is a bad way to measure because the golden age of physicians was actually the late 80s and early 90s, when all these ridiculous HMO/PPO/ACO/XYZs were new, weak, and the doctors could game them into huge patient inflow increases at prices dictated (more or less) by physicians.

Since 1997 the pay from medicare has been frozen and everything else is paid out as a percentage of medicare payment schedules. So the bigger issue is the last 15 years have had zero effective growth against inflation. As you pointed out: in 40 years inflation accounted for a 490% increase in worth (or a 80% decrease in the buying power of the dollar, as it may be if you do the stat the other way). Now in 15 years the physician has seen no increase in payments and payments have been totally independent of inflation. Think about how much lost revenue the unresponsiveness to inflation accounts for.

*that* is the issue. The argument here might be did physicians get spoiled with the real golden age of 1985-1995, and perhaps the price freeze is only a travesty through the eyes of someone who had experienced the income golden age.... since the income now (admittedly with a much higher patient load) is finally back to equivalent inflation-adjusted earnings to what it was 40 years ago.
This is the reality in America for almost every sector. Stagnate salaries, most less after adjusting for inflation.
 
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DocEspana

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This is the reality in America for almost every sector. Stagnate salaries, most less after adjusting for inflation.
No.... that's actually not the reality for almost any sector. Please name even one other occupation that has not seen any pay increase in the last 15 years. Perhaps I'm totally wrong, but I can't imagine that any occupation exists that had a similar problem because of the unique situation that caused the physicians' situation
 

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No.... that's actually not the reality for almost any sector. Please name even one other occupation that has not seen any pay increase in the last 15 years. Perhaps I'm totally wrong, but I can't imagine that any occupation exists that had a similar problem because of the unique situation that caused the physicians' situation
Teachers.
 
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It really comes down to insurance companies. The insurance companies used to reimburse practically anything doctors would bill. It wasn't like today where you have justify everything you do, get denied claims because there was no indication, and the politics that are involved. The insurance companies now dictate how much an office visit is worth and their standards have declined greatly compared to before. They see that there is always a line of doctors willing to accept the low reimbursement.
 

DocEspana

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Teachers.
Or new York, where teachers have fully unionized in the last 15 years and had unparalleled gains in income as well as benefits. In the last 10 years teachers have foubd a way to earn 3 payments for one day. If they work for the union they get 30 (I believe is the number) paid days off solely for union matters. Aaaand they get paid by the union for those days simultaneously. And a union approved sub has to be used, who kicks back part of their income to thr union. Who gives a yearly salary based on those kickbacks to union members.

So everyone gets paid more and some completely milk the school districts dry. NY at least.
 

notbobtrustme

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No.... that's actually not the reality for almost any sector. Please name even one other occupation that has not seen any pay increase in the last 15 years. Perhaps I'm totally wrong, but I can't imagine that any occupation exists that had a similar problem because of the unique situation that caused the physicians' situation
http://www.rasmusen.org/x/2006/03/15/one-income-vs-two-income-families/

Basically, the average person's salary has declined by ~800 dollars since the 1970s. We make more today because most households are two income rather than a single income.
 

DocEspana

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http://www.rasmusen.org/x/2006/03/15/one-income-vs-two-income-families/

Basically, the average person's salary has declined by ~800 dollars since the 1970s. We make more today because most households are two income rather than a single income.
You have to read more carefully. That's 800 less, AFTER inflation adjustment to 2004 money.

The last 15 years of inflation is roughly a 2x increase in raw salary (slightly under a 5 fold increase over the last 40 years). Losing 800 is nothing unless you were making 800 in 1997 and still making 800 in 2012. Were talking about physicians making 135k in 1997 dollars and 135k in 2012 dollars for the same work while x profession made 75,000 in 1997 and 149,200 in 2012 for the same work. It's easier, admittedly, to track this in physicians as we are still primarily fee for service (RVU emergency rooms aside) and the fees have not changed in any appreciable way thanks to the governments SGR system. 800 short is nothing when you're still roughly inflation responsive. Physicians have not seen their salary change a dime (they have seen their patient load increase though) while other people have seen the raw income massively increase (just 800 short of what it would be if totally following inflation)
 

Dharma

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Or new York, where teachers have fully unionized in the last 15 years and had unparalleled gains in income as well as benefits. In the last 10 years teachers have foubd a way to earn 3 payments for one day. If they work for the union they get 30 (I believe is the number) paid days off solely for union matters. Aaaand they get paid by the union for those days simultaneously. And a union approved sub has to be used, who kicks back part of their income to thr union. Who gives a yearly salary based on those kickbacks to union members.

So everyone gets paid more and some completely milk the school districts dry. NY at least.
Not trying to stir up a $#!+ storm, but very few teachers in NYC have this deal. When I taught in the city, there was 1 teacher out of the close to 100 in our building that was on the union payroll. Subs are rarely from outside of the building and are usually a teacher that has to be pulled from his prep period (a prep period that is definitely needed, for many reasons). He will earn extra money for that period, but he will also pay in terms of stress and frustration (trust me, I've been there, and I was one of the better teachers in the building). Anyhow, a tiny minority of regular teachers work for the union overall, although all have to pay fees to the union with every paycheck, regardless of how little the union actually does for the average teacher. I won't even begin to touch on the micromanagement and bs one has to deal with from administration, who often display a level of incompetence that would have the average parent pulling their kids out of the school. I won't start on parents either.

Typical NYC teachers gets 10 sick/personal days in a year. Take those days and you can bet your @$$ you'll get a U rating, which means no advancement on the pay scale (advancements don't always come with a raise; they do take one closer to the raise). On top of all this, the typical teacher has to work in one of the most malignant environments out there (disrespectful students, administrators, beaten down colleagues who love to share their misery, parents who have no clue and are still children themselves, etc), on top of putting in close to 60 hours in every week regularly. Yes, the school year and summer breaks are nice, but without them you would see droves of teachers hurling themselves from the nearest East River bridge.

Unless one has actually spent significant time as a public school teacher, he or she has absolutely no clue how it really is. The outsider only sees numbers and for the most part, teachers are underpaid and overworked... well, the good ones at least, hence the reason why most of the good ones peace-out within a few years. Any raises teachers have seen over the years are well deserved. You'd know if you'd been in their shoes.

Sorry for the thread derail there. {Stepping down from soapbox}.
 

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haha It's okay. I likely shouldnt have chosen NYC teachers because they get mauled. But the union (at least slightly upstate where I'm from) had the exact same structure but MUCH more activity among the teacher population. And where I'm from (dutchess county, if you want to fact check me) Teachers make 80-105K a year depending on the district and the grade taught. Family friend is a big shot on the state union and literally explained to me that they copied the NYC "triple pay" theory and have applied it to the whole state. I'm not mentioning that to villify teachers (far from it), just wanted to expand that I really should have clarified I was talking about teachers averaged over the state, not in the pressure cooker of NYC.

And yea. It's a side track, but I think you can agree that a teacher is getting paid much more now, across the board, then they did in 1997, if you just compared paychecks for x number of weeks of teaching. That was my only real point. A physicians paycheck for x number of patients has not increased at all in the last 15 years, completely disassociating it from inflation.
 

Dharma

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haha It's okay. I likely shouldnt have chosen NYC teachers because they get mauled. But the union (at least slightly upstate where I'm from) had the exact same structure but MUCH more activity among the teacher population. And where I'm from (dutchess county, if you want to fact check me) Teachers make 80-105K a year depending on the district and the grade taught. Family friend is a big shot on the state union and literally explained to me that they copied the NYC "triple pay" theory and have applied it to the whole state. I'm not mentioning that to villify teachers (far from it), just wanted to expand that I really should have clarified I was talking about teachers averaged over the state, not in the pressure cooker of NYC.

And yea. It's a side track, but I think you can agree that a teacher is getting paid much more now, across the board, then they did in 1997, if you just compared paychecks for x number of weeks of teaching. That was my only real point. A physicians paycheck for x number of patients has not increased at all in the last 15 years, completely disassociating it from inflation.
80-105K!?! Wow! That's insane. District to district these things differ. In NJ, my old man, whose been teaching for 20 years now, will never hit those numbers in his current district (which is in a good area). I knew a few old timers at my old school who were pulling in those numbers but most folks in the city bail before pushing 6 figures. Some of the charter schools have those 100K+ salaries but the teachers at these schools are the best of the best, and school hours are 8-5 on top of whatever time they need for lesson planning, grades, conferencing, etc.

I see what you're saying (and I know you do your homework, especially regarding statistics ;)). I was just throwing it in there for a first person perspective. It's always good to include a former teacher's perspective when the subject arises.

Anyways, you're totally right about pay increases and the unparalleled consistency in which they have occurred. I'd reckon to say that you can throw a good portion of the public sector along with the teachers in there too (cops, firemen, etc). No one feels bad about doctors making less money, regardless of the reality the average joe either can't or neglects to see. Most people think of an ER George Clooney or the two high rollers from Nip-n-Tuck when you mention the word 'doctor.' I'll probably be driving around in my same old Toyota 7-8 years from now when I finally get a real paycheck... let's hope so at least; I wanna push 250k miles on that thing. :D
 

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Yes... because it was easier to get away with medicaid/medicare fraud and reimbursement was much higher.
 
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Ibn Alnafis MD

Ibn Alnafis MD

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The issue is that from 1997 on physicians pays have been frozen (technically they rose 0.4-0.6%). Measuring against the seventies is a bad way to measure because the golden age of physicians was actually the late 80s and early 90s, when all these ridiculous HMO/PPO/ACO/XYZs were new, weak, and the doctors could game them into huge patient inflow increases at prices dictated (more or less) by physicians.

Since 1997 the pay from medicare has been frozen and everything else is paid out as a percentage of medicare payment schedules. So the bigger issue is the last 15 years have had zero effective growth against inflation. As you pointed out: in 40 years inflation accounted for a 490% increase in worth (or a 80% decrease in the buying power of the dollar, as it may be if you do the stat the other way). Now in 15 years the physician has seen no increase in payments and payments have been totally independent of inflation. Think about how much lost revenue the unresponsiveness to inflation accounts for.

*that* is the issue. The argument here might be did physicians get spoiled with the real golden age of 1985-1995, and perhaps the price freeze is only a travesty through the eyes of someone who had experienced the income golden age.... since the income now (admittedly with a much higher patient load) is finally back to equivalent inflation-adjusted earnings to what it was 40 years ago.
You are right.

After reading your post, I tried to search through the internet for evidence to prove you wrong, and found out that the situation is worse that what mentioned.

The concept of using RVU and conversion factors to reimburse physicians was introduced in 1989 and took effect in 1992. The initial value of the conversion factor (1992) was $31. The value increased through the following years to meet inflation until 1998 when it reached $36.68. After that, things took turn for the worse. The value remained almost unchanged for the following 10 years followed by two sharp declines in 2009 and 2011. Currently, the value is held at $34, which is equivalent to 70% of the initial rate of 1992 (using the inflation calculator).

http://www.ama-assn.org/resources/doc/rbrvs/cf-history.pdf
http://146.142.4.24/cgi-bin/cpicalc.pl?cost1=31.00&year1=1992&year2=2012
 

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You are right.

After reading your post, I tried to search through the internet for evidence to prove you wrong, and found out that the situation is worse that what mentioned.

The concept of using RVU and conversion factors to reimburse physicians was introduced in 1989 and took effect in 1992. The initial value of the conversion factor (1992) was $31. The value increased through the following years to meet inflation until 1998 when it reached $36.68. After that, things took turn for the worse. The value remained almost unchanged for the following 10 years followed by two sharp declines in 2009 and 2011. Currently, the value is held at $34, which is equivalent to 70% of the initial rate of 1992 (using the inflation calculator).

http://www.ama-assn.org/resources/doc/rbrvs/cf-history.pdf
http://146.142.4.24/cgi-bin/cpicalc.pl?cost1=31.00&year1=1992&year2=2012[/QUOTE
As someone who graduated in 82 followed by residency and solo practice revenues have declined driven by several forces. The first was drug. These eliminated numerous admissions for testing, admissions before the day of surgery and long stays.. Next technology has changed look at lap chole 1 day compared to 5 days other procedures ie. tents instead of cab. last was insurance going to rvu based payment. Hmo came and went hospitals have bought and sold practices but the biggest change is that new procedure whether of benefit or not are usually aided higher than older or cognitive procedures.
 
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I'm too lazy to dig, but it seems like if the % of primary care physicians is declining and wages are stagnant or declining, there could be some pretty significant decreases in income for specialists.
 

Prncssbuttercup

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I worked in biotech for the last 10yrs, even with the raises I've had, I make less now due to inflation than I did in 99 when I started. In 1970 gas was 25c/gal or less, cell phones didn't exist, cars were ~3k new, and a house was <50k for something very nice. Now, a liveable house is 3x your annual salary, cell phones, gas, car prices, health ins (that didn't really exist in 1970), ALL cost way more... It sucks...
 
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Ibn Alnafis MD

Ibn Alnafis MD

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I worked in biotech for the last 10yrs, even with the raises I've had, I make less now due to inflation than I did in 99 when I started. In 1970 gas was 25c/gal or less, cell phones didn't exist, cars were ~3k new, and a house was <50k for something very nice. Now, a liveable house is 3x your annual salary, cell phones, gas, car prices, health ins (that didn't really exist in 1970), ALL cost way more... It sucks...
I disagree with you on that. Can you imagine life without internet, cellphones, netflix, and air conditioners. Technology and convenience have a price. Living in 1970? No, thank you. No wonder back then drug addiction reached an epidemic levels.

Btw, 50k in 1970 = ~300k. Unless you want to live in SoCal, you can a very nice, big house for that much.
 

Prncssbuttercup

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Not in Denver, 450+ to have a 'very nice big house' I'm in the market, so I know, 300k gets you a run-down needs a complete overhaul 2500sqft home (which for the area is not big, its average) fyi, we had AC in the 70s, not sure if you were alive then...
Internet=bills
Netflix=bills

Some modern conveniences are great, but they cost money people didn't have to spend in the 70s, or even 80s. People now think cable is a necessity, its not I don't even have a TV. I am currently without internet, I drive to a coffee shop 2x/week. These things all have costs attached to them... Everyone I know is putting 150-250+/mo into cell phones, internet, and cable. That's a fair chunk of change into 3 things that didn't exist in 1970, 1980, or later (except cable TV)...
 

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Not in Denver, 450+ to have a 'very nice big house' I'm in the market, so I know, 300k gets you a run-down needs a complete overhaul 2500sqft home (which for the area is not big, its average) fyi, we had AC in the 70s, not sure if you were alive then...
Internet=bills
Netflix=bills

Some modern conveniences are great, but they cost money people didn't have to spend in the 70s, or even 80s. People now think cable is a necessity, its not I don't even have a TV. I am currently without internet, I drive to a coffee shop 2x/week. These things all have costs attached to them... Everyone I know is putting 150-250+/mo into cell phones, internet, and cable. That's a fair chunk of change into 3 things that didn't exist in 1970, 1980, or later (except cable TV)...
Agreed. 450k? Apartments cost more than that in Boulder.
 

Prncssbuttercup

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Boulder is a whole 'nother story.... I don't want to live there, but I couldn't afford it even if I could. We're trying to stay within ~5-7 miles of I-25 & Colorado because that is within 10mi of most of the Denver residency hospitals, and my husbands job... Still expensive... We will have to keep our roommate to afford most of it...